Carlo Gavazzi: `Strategic focus successfully achieved'

Steinhausen, Switzerland - Enzo Urbani, chairman and ceo of the Carlo Gavazzi Group announced his company had reached the goal of its four year program to become a ''pure electronics group'' with an active concentration in two sectors, Automation Components and Electronic Packaging. But, in order to do this, it had to ''pay a high price'' to achieve the change.

By Control Engineering Staff

09/09/2002

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Steinhausen, Switzerland - Enzo Urbani, chairman and ceo of the Carlo Gavazzi Group announced his company had reached the goal of its four year program to become a ''pure electronics group'' with an active concentration in two sectors, Automation Components and Electronic Packaging. But, in order to do this, it had to ''pay a high price'' to achieve the change.

Carlo Gavazzi headquarters building in Steinhausen.

Two years ago the euro 341m company had three business units, almost equal in revenue: Automation Components (104m), Engineering and Contracting (111m), and Electronic Packaging (126m). The group sold off its Italian-based Engineering and Contracting business in March 2001 and the divestiture cost the company almost euro 28m in non-recurring losses.

However, as Mr. Urbani pointed out, ''Carlo Gavazzi freed itself of a unit characterised by a high-risk profile, below average margins, volatile performance and requiring close and excessive management attention.''

In the year-end figures presented by Mr. Urbani, weakness in the European market caused the Automation Components unit to suffer a decline in turnover to euro 97m, and the American-based Electronic Packaging unit, which has high exposure to telecomm markets, experienced a ''harsh setback'' to 83m. Operating profits in both units declined, yet both of them remained profitable.

In another move to eliminate what Mr. Urbani called ''non core activity,'' the company divested its production of electromechanical relays and switches to a contract manufacturer and will close its manufacturing plant located near Milan.

By eliminating its engineering unit and focusing on its two core businesses, the company reduces its dependency on the Italian market, from 35% to 16% of operating revenue.

''Carlo Gavazzi has now evolved into a purely electronics group,'' Mr. Urbani said.